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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 15178 / December 6, 1996
SECURITIES AND EXCHANGE COMMISSION v. PLEASURE TIME, INC. D\B\A
TELEPHONE INFORMATION SYSTEMS, ET AL. (S.D. OHIO, CIVIL ACTION
NO. C-1-95-178, FILED NOVEMBER 26, 1996)
The Securities and Exchange Commission announced that on
November 26, 1996, a Final Judgment Granting Permanent Injunction
and Other Equitable Relief By Default (Final Judgment) was
entered against Pleasure Time, Inc., d/b/a Telephone Information
Systems (Pleasure Time), Minette Acra Kelly, d/b/a Group Dynamics
Downline (GDD), Minette Acra Kelly (Acra), and Richard A. Welch
(Welch), by the United States District Court for the Southern
District of Ohio, Western Division, in Cincinnati, Ohio. The
Final Judgment enjoins GDD and Acra from violating Sections 5(a),
5(c) and 17(a) of the Securities Act of 1933 (Securities Act) and
Sections 10(b), 15(a)(1) and 15(c)(1) of the Securities Exchange
Act of 1934 (Exchange Act) and Rules 10b-5 and 15cl-2 thereunder;
and Pleasure Time and Welch are enjoined from violating Sections
5(a), 5(c) and 17(a) of the Securities Act and Section 10(b) of
the Exchange Act and Rule 10b-5 thereunder. Further, Pleasure
Time, GDD, Acra and Welch, jointly and severally, are ordered to
disgorge the sum of $663,831, which represents the ill-gotten
gains that they received from investors, and pre-judgment
interest thereon in the amount of $46,567.
The Commission filed its complaint on March 13, 1995,
seeking injunctive and other relief against Pleasure Time, GDD,
Acra and Welch, entities and persons located in Florida and Ohio.
The Commission's complaint alleges that the defendants
participated in a fraudulent sales scheme involving unregistered
securities that were offered and sold to approximately 20,000
investors raising over $3 million. Investors were recruited
through a "multi-level marketing" system in which investors were
encouraged to recruit other investors. Investors were recruited
by telephone, facsimile delivery, and the Internet and other
computer networks. They were allegedly told that they could reap
enormous profits from a world wide telephone lottery. The
lottery program was purportedly going to employ a 900 number to
attract players with projected receipts of $300 million.
According to the complaint, defendants understated and failed to
disclose legal, regulatory and technical obstacles to starting a
lottery. The complaint further alleges, among other things, that
defendants variously violated the antifraud and registration
provisions of the federal securities laws. For further
information, see Lit. Release No. 14440, March 15, 1995.